The tax implication for Dan receiving the $120,000 depends on the tax laws and regulations in the specific country where Dan is located. In general, receiving a genuine redundancy payment may have tax implications, and the amount of tax payable may depend on various factors, such as the tax laws in the country, the amount of the payment, and Dan's individual circumstances.
Assuming that Dan is located in Australia, and based on the information provided, the following tax implications may apply:
The $50,000 genuine redundancy payment may be tax-free up to a certain limit, depending on Dan's years of service with the employer. For example, if Dan had worked for the employer for more than 15 years, the first $10,638 of the payment may be tax-free, and the rest may be taxed at a concessional rate.
The $50,000 redundancy payment terming may be taxed at Dan's marginal tax rate, depending on the specific circumstances of the payment.
The $120,000 earnings before redundancy may also be taxed at Dan's marginal tax rate.
Therefore, it is important for Dan to seek professional advice from a tax accountant or a financial advisor to determine the exact tax implications of receiving the $120,000, taking into account the specific tax laws and regulations in his country and his individual circumstances.